The MSCI EMEA Index is set to climb to 400 by the end of
2013, Credit Suisse analysts said in an e-mailed report today.
The gauge slipped 0.2 percent to 346.65 by 3:38 p.m. in London
and has gained 14.3 percent this year, compared with a 12.8
percent increase in the MSCI World Index, data compiled by
Bloomberg show.

Investors should hold 12 percent above the index weighting
for Russia and 10 percent for Hungary, and 5 percent below for
Poland and 10 percent under for South Africa, according to the
report. Switching each January to the worst-performing three
countries of the previous year would have outperformed the EMEA
benchmark by 122 percent since 1999, it said.

“We believe 2013 will mark a re-emergence of emerging
equity market outperformance,” Alexander Redman and Arun Sai,
London-based analysts at Credit Suisse, wrote in the report.
“However, global equity funds do not appear positioned to take
advantage of a resurgence in emerging market outperformance.”

Global equity funds have reduced their average exposure to
the region to 14 percent below the benchmark by the end of
October from 2 percent under in May, according to Credit Suisse.
Their exposure to Brazil, Russia, India and China has also
fallen to 14 percent below the benchmark from 4 percent above
over the same period, the report said.

Russian Stocks

Russia is hurt by a lack of “any tangible improvement” in
the fixed investment climate, an absence of domestic
institutional ownership and “challenging demographics”
compared with other emerging markets, according to Credit
Suisse.

Russia’s OAO Novatek, a non-state natural-gas producer,
retailers OAO Magnit and OAO M.Video, Internet companies Yandex
NV and Mail.ru Group Ltd. are among the investment bank’s top
stock choices for 2013, the report said. The list also includes
South Africa’s Discovery Holdings Ltd., the owner of the
country’s biggest medical-insurance administrator, Arcelik AS,
Turkey’s largest maker of washing machines, and Saudi Arabia’s
Riyad Bank, according to the report.